1. AUDIT Explain the audit context and the BTC internal control system TRAINING LAF 2009

2. Training LAF 20092 Taining objectives The participants will be able to explain:  The basics of BTC internal control system.  Usefulness and the course of the different types of audits.

3. Training LAF 20093 Content 1. BTC internal control system 2. Audit and internal control 3. The other controls bodies (audit comittee…) 4. Internal audit (Presentation BTC internal audit service) 5. External audit (Presentation BDO Office)

4. Training LAF 20094 1. Internal control system – General points Internal control definition:  Internal control is broadly defined as a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the following categories: 1. Effectiveness and efficiency of operations. 2. Reliability of financial reporting. 3. Compliance with applicable laws and regulations. COSO: Committee of Sponsoring Organizations of the Treadway Commission INTOSAI: International Organization of Supreme Audit Institutions

5. Training LAF 20095 1. Internal control system – General points  Internal control objectives:  Improve the risk management  Communicate and reassure the stakeholders

6. Training LAF 20096 1. Internal control system – General points IS  Internal control IS: A managerial technique aiming at mastering the activities is NOT  Internal control is NOT: An additional layer of « control » « to control » = to master « internal » = integrated into the management

7. Training LAF 20097 1. BTC Internal control system DomainRisk Strategy  more than 200 projects and 18 RR that work differently Human ressources  Competence management Accounting  Reliability of the financial information  Fraude Cash management  Liquidity cushion  Opportnuity costs

8. Training LAF 20098 1. BTC Internal control system (cont.) DomainRisk Budget  Overspending  Eligibility and efficiency of the expenses Legal  Expenses after convention  Rules linked to Public contracts  Management contracts  Partner country rules and legislation (HR, tax system,…)

9. Training LAF 20099 1. BTC Internal control system (cont.) The BTC ICS aims at mastering the financial risks through:  Guidelines for the projects financial mangement = DIRECTIVES  RACI= IMPLEMENTATION  Financial tools (FIT, Navision) = TOOLS  Implemention/application control = EVALUATION 3 fundamental levels  PROJECT  REPRESENTATION  HEADQUATER (Brussels)

10. Training LAF 200910 1. BTC Internal control system (cont.) PROJECT – AT Do we apply the rules? RR – LAF Are the rules correctly applied? HQ – RC Is the system under control?  Procedure manual  Checklists  Comply  Field missions  Training  Support and advices  Field missions  LAF coaching  New tools and rules development

11. Training LAF 200911 1. BTC Internal control system (cont.) Traditional approach,  Is the responsibility of the controller/inspector  mechanical  The stress is put on the accounting systems  The controls are added to the systems, activities  Less strucutre and formalisation Our approach,  From the « brake » to the management support tool … MASTERY  To a true MASTERY

12. Training LAF 200912 Some principles:  Tasks / functions seperation (fraud)  Decision  Execution  Management  Control  Processes (RACI) / Function description  A project is not a black box 1. BTC Internal control system (cont.)

13. Training LAF 200913 2. Audit and internal control  Independent contracted parties  Information for the stakeholders and shareholders  Financial statements = exact image of the past events  Independent from the direction  Informations for the AC and Direction Committee  Futures events /internal control system evaluation  Properties protection / information quality  Directives and performance improvements. Internal Audit External Audit Internal Control System Processes / Procedures / Tools BTC

14. Training LAF 200914 2. Audit and internal control External auditor  Generally legally independent service provider  Reports according to a pre-defined mandate  Concerns the risks related to the mandate’s objectives  Respects principles or specific set of rules (GAAS, ISO, EMAS,…)  Applies auditing techniques (unquestionable observations, contradictory process, recommendations)  Is not in charge of the follow-up of the recommendations implementation  Often involved in the certification  Generally have a fragmented view  Often mistook for the « independent auditor » (Réviseur/CPA Certified Public Accountant)  Not only financial  Works intermittently and during favoured periods

15. Training LAF 200915 2. Audit and internal control Internal auditor  Is a personnel member  Reports to the Audit Committee  Focuses on his/her organisation’s risks  Has a global/helicopter view of the organisation (his/her actions concern all the functions, all the processes)  Ensures the follow-up of the recommendation’s implementation  Respects stricts rules (Institute of the Internal Auditors)  Is the management partner  Has planned missions

16. Training LAF 200916 2. Audit and internal control Internal control // Internal audit Internal control  Integrated process in the organisation’s operations  Is the responsibility of the management and the personnel of the organisation Internal audit  Independent and objective function within the organisation in charge of informing the management on the functioning of the internal control system  Is not directly involved in the implementation or maintenance of the internal control system

17. Training LAF 200917 3. Other controls bodies GOVERNMENT COMMISSIONERS GOVERNMENT COMMISSIONERS 2 commissioners that come under the:  BTC Supervision Ministery  Ministery of Budget Part: control the respect of  The law  The status  The management contract  The awarding conventions and tasks of public services

18. Training LAF 200918 3. Other controls bodies AUDIT COMMITTEE Definition:  The BTC Audit Committee is related to the highest management authority of the organisation. Actually, according to the law of BTC and the management contract, the role of the Audit Committee is to ensure that BTC identifies and manages on an appropriate manner the whole risks.

19. Training LAF 200919 3. Other controls bodies AUDIT COMMITTEE Functions :  Informs the management board on the reliability of the internal control system  Supervises the internal audit activities  Guarantees the independence and effectiveness of the internal auditors  Attends that the recommendations are taken into account  Makes easier the collaboration between the internal auditors and the management

20. Training LAF 200920 4. BTC Internal Audit  Dorota Maciag Gerardy Vincent  +32 2 505 18 54 +32 505 18 14

21. Training LAF 200921 5. External Audit Presentation BDO Office